Inflation remains the main talking point in financial markets as the Fed Reserve is set to increase interest rates this week. This would mean more pain for consumers who are already feeling the pinch. Canadians are expected to pay more for homes, with many canceling vacation plans due to inflation.
Office buildings in the US are also distressed, with almost $23 billion worth of commercial real estate in foreclosure. However, if you win $1.2 billion in the Powerball lottery, you may be able to navigate crushing financial times.
Let’s have a look at the headlines that rocked financial markets this week.
Fed expected to increase interest rates next week
The Federal Reserve is likely to start raising interest rates again next week, and there is still a chance that they will do it again later in the year.
Officials were glad to see that price pressures eased last month, but they are not likely to say that they have won their fight against inflation, which has surprised them over and over again with how persistent it is.
When the central bank meets next week, rates are likely to go up by a quarter of a point, which would be the highest level in 22 years.
Inflation forces Canadians to change or cancel vacation plans
A new poll by Leger cited by the Financial Post shows that inflation has caused a third of Canadians to change or cancel their vacation plans.
A July survey of 1,526 Canadians found that 46% of those who changed their holiday plans are also eating out less.
Inflation slowed to 2.8% in June, but grocery prices still went up 9.1% last month, according to Statistics Canada. The agency said that lower petrol prices compared to last year were the main cause of lower inflation.
Canadian home prices will be 8.5% higher by year end
Royal LePage has upgraded its forecast for national home prices, despite indications that sales and prices may be cooling in the aftermath of the most recent interest rate hikes by the Bank of Canada.
The national aggregate home price, calculated from the median of all housing types, is expected to increase by 8.5% to $821,454 by the end of the year, up from $757,100 in the fourth quarter of 2022, according to a market survey forecast released by a national brokerage on July 13.
In its April survey, Royal LePage estimated that prices would conclude the year at $791,170, a significant increase from the 4.5% increase predicted.
At the start of 2023, the Canadian housing market increased dramatically. Average home prices increased from $612,855 in January to $728,972 in May, according to data from the Canadian Real Estate Association (CREA).
The renewed activity drew the attention of the Bank of Canada and contributed to its decision to raise rates to a 22-year high of 5% on July 12, following an unexpected increase in June.
Value of distressed office buildings in the US spikes 36% to almost $25bn
Approximately $24.8 billion worth of office buildings in the United States were in distress by the end of Q2 2023, surpassing the previous leading commercial real estate laggards, hotels and retail properties.
The total value of offices that were in financial trouble or that lenders had already repossessed increased by about 36% from the first quarter, according to a report from MSCI Real Assets on Wednesday.
At the end of June, retail properties valued at $22.7 billion, including malls and hotels valued at $13.5 billion were in distress. The total value of all commercial properties in distress increased by 13% from the first quarter to nearly $72 billion.
Offices in the United States are more stressed than those in other real estate sectors due to weak demand and the pervasive acceptance of remote work. Office use in ten main U.S. cities is roughly half of its pre-pandemic average. As of June 30, more than 20% of U.S. office space was vacant.
User engagement on Threads falls by 70%
User engagement on Twitter’s rival, Threads, has continued to fall after an initial surge in sign-ups. For the second week in a row, the number of daily active users on the Meta platform went down. This time, it dropped to 13 million, which is about 70% less than it was on July 7.
The average amount of time people spend on the iOS and Android apps has also gone down from 19 minutes to 4 minutes. The average time spent by Android users in the U.S. dropped from 21 minutes on launch day to 5 minutes now.
After more than 100 million people signed up for the app in the first week after it came out earlier this month, executives at Meta said they expected that number to go down over time. They’ve shown that they don’t think the drop is a big deal and said that they’re working on more features.
The Powerball lottery winner scoops a $1 billion jackpot
A single Powerball ticket bought in Los Angeles won the $1.08 billion jackpot. This is the third-largest Powerball prize in history.
Powerball said that the winner can choose between a one-time payment of an estimated $516.8 million (before taxes) or annuity payments of an expected $1 billion over 29 years. Also, that number is before taxes.
The numbers that won were 7, 10, 11, 13, and 24, and the red Powerball number was 24.
Since the April 19 drawing, when someone in Ohio won the $252.6 million jackpot, no one had won Powerball until Wednesday. Since then, 38 drawings have passed without a big winner.
Photo by Fer Troulik on Unsplash